Gas-power generation in Myanmar remains ‘weak’ amidst oil giants’ exit plans

Total and Chevron’s are looking at withdrawing from the Yadana natural gas project.

Gas-power generation growth in Myanmar will remain “weak” after Total and Chevron’s announced plans of withdrawal from the Yadana natural gas project, Fitch Solution reported.

Total withdrawal will be effective in July 2022, at the expiry of its six-month contract with Unocal-Chevron, PTTEP, and the Myanmar Oil and Gas Enterprise. Chevron, meanwhile, is in the process of reviewing plans to exit the market.

“Myanmar’s gas power generation growth will remain weak for the coming decade, in line with our existing views and forecasts,” Fitch reported.

“We expect the gas power sector outlook to worsen with Total and Chevron’s unfavourable stance on continuing operations in Myanmar.” Total and Chevron ate the largest shareholders of the gas project, each holding 31.24% and 28.26%.

The Yadana gas field is the largest in Myanmar, accounting for about half of its domestic gas demand and power generation.

“This means that affected plant operators in both Myanmar and Thailand will have to turn to other domestic gas fields or gas imports for fuel. This could put strain on the domestic fuel supply and increase prices for operations,” the report also read.

In addition, this could also lead to increased power shortages as gas contributed 34% to the market in 2021, next to hydropower at 56%.

“In the short-term, the scaling back of Total’s operations in Yadana will weigh down on gas supply to gas-fired power plants and worsen the deteriorating power sector situation in the market,”

Fitch noted this is in line with its projections that Myanmar’s gas power generation power sector will experience weak performance, at a contraction of 9% y-o-y in 2022 and 1% growth in 2023.

In addition, Myanmar’s gas power generation will likely only reach back to 2020’s level of 11.4 terawatt-hour by 2031.